Instructions For Form Pa-20s/pa-65 - Schedule Oc - Other Credits

of the restricted tax credit less any

liability for the tax year in which the

PA DEPARTMENT OF REVENUE

commissions paid are included as the

credit is approved for use the tax

BUREAU OF CORPORATION TAXES

sales price of the tax credit sold.

credit must first be applied to that

PO BOX 280701

tax liability. Review the specific

HARRISBURG PA 17128-0701

Purchaser of a Restricted

information for each tax credit to

determine if the tax credit must first

The statement must be signed by

Tax Credit

be applied to corporate liability.

an authorized representative of the

A taxpayer who purchases a

If an entity does not use all

entity, and should be submitted

restricted tax credit at a cost to him

approved tax credits, it may elect in

before owners file their individual tax

or her of less than the full value of

writing to pass through all or a

returns.

the tax credit must also report a gain

portion of the tax credit to owners, in

Some tax credit programs provide

on the sale, exchange or disposition

proportion to the share of the entity’s

a claim form, located on the reverse

of property for Pennsylvania personal

distributive income to which the

side of the award letter. Credit

income tax purposes.

owner is entitled. In most cases the

awardees should use the claim form

The taxpayer purchasing the

tax credit may be applied up to the

to indicate the tax accounts to which

restricted tax credit reports the

full amount of owners’ tax liabilities,

the tax credit should be applied.

transaction as a sale of intangible

minus any other nonrefundable

There are two exceptions to the

property for Pennsylvania personal

credits that are applied first. See the

process outlined above for passing

income tax purposes PA-20S/PA-65

information regarding specific tax

through tax credit:

Schedule D. Unlike the sale of a

credits to review existing restrictions

●

To pass through an Educational

restricted tax credit, the purchaser

or limitations.

Improvement Tax Credit, the

records as his or her cost basis, the

An owner of a pass through entity

taxpayer must complete and submit

full purchase price of the tax credit

to which a tax credit is transferred

form REV-1123, Educational

(complete sales price of all such tax

must immediately claim the tax

Improvement Tax Credit Election

credits purchased plus any

credit in the tax year in which the

Form.

commissions paid by the purchaser).

transfer is made. The owner may not

●

To pass through a Keystone

The taxpayer records the purchase

carry forward, carry back, obtain a

Innovation Zone tax credit, visit the

date as the date acquired and

refund of, sell, assign or pass

Department of Community and

records the tax year end date

through the tax credit again.

Economic Development’s (DCED)

(usually December 31) for the tax

Married couples with joint

website at

call

year to which the tax credit is applied

ownership in pass through entities

DCED Customer Service at 1-800-

as the date the restricted tax credit

must be separately listed on the

379-7448.

was sold.

entities’ pass through of credit

The sales price of the tax credit is

request in order for credit to be

For general information pertaining

the full value of the tax credit

applied to each individual’s tax

to all restricted tax credits as well as

permitted or allowed to be applied to

number.

specific details regarding each tax

the tax return of the taxpayer. By

credit individually – including each

recording only the amount of tax

Example.

Husband and wife Jim and

tax credit’s carry-forward and pass

credit allowed or permitted as the

through rules, applications and

Jane jointly own a 50 percent

sales price and the full purchase

guidelines – review the description in

interest in a partnership, and their

price of the tax credit as the basis,

these instructions and Chapter 17 of

son John owns the other 50

restricted tax credits purchased and

the Pennsylvania Personal Income

percent. All income is distributed

not able to be used due to any tax

Tax Guide.

according to the ownership

limitations imposed under the law

percentages. The request to pass

permitting the use of a purchased tax

through credit must separately list

credit require no pro-ration of tax

Tax Credits

Jim’s and Jane’s tax numbers, each

credit cost and no separate reporting

receiving 25 percent of the credit,

of the loss on unused tax credits.

and John receiving the remaining 50

Employment

A taxpayer who sells tax credits

percent under his tax number. This

and/or offsets their tax liability with

Incentive Payments

method must be followed even

purchased or assigned tax credits,

though Jim and Jane receive a

(EIP) Tax Credit

does not need to send documentation

separate RK-1 or RK-1 from the

of sale or assignment with their PA-

This tax credit expired Dec. 31,

partnership.

20S/PA-65 Information Return.

2009. Although no new tax credits

However, the department reserves

are being issued, carry forward of

To pass through tax credits to

the right to request this

unused tax credits is allowed.

owners, an entity must submit a

documentation if needed.

The Pennsylvania Department of

request on entity letterhead to the

Labor and Industry (L&I) administers

Department of Revenue at the

Passing Through Tax

the award of this tax credit. Eligibility

following address listing total amount

is based on the hiring of eligible

Credit to Entity Owners

of credit to be distributed to the

public welfare recipients and/or

Prior to passing tax credits through

entity owner(s), the name and

individuals receiving or who have

to entity owners, some tax credits

address of each owner, amount of

received rehabilitation services

must first be applied to the entity’s

tax credit to be passed through to

through a state rehabilitation service

corporate tax liability, if any, for the

each owner, tax year, tax type and

program or the Veterans’

year in which the tax credit is

owner’s tax identification number.

Administration. The taxpayer

granted. If the entity has a tax

See the Example.

receives certification for this tax

credit from L&I.

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Instructions for PA-20S/PA-65 Schedule OC

Instructions For Form Pa-20s/pa-65 - Schedule Oc - Other Credits - 2011 Page 2

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